Guest post by Glenn Hansen, president & CEO, BPA Worldwide
It’s a term easily thrown around the media industry yet often lacks an articulate definition. According to eMarketer, 73% of Unites States display advertising spend is directed through programmatic media buying and selling. While “programmatic” execution evolves daily, the opportunities and risks for publishers are often unclear. As B2B advertisers increasingly shift budget towards programmatic buys, it is critical that publishers have a comprehensive understanding of their roles in the evolving media buying landscape.
What Is Programmatic?
The origin of programmatic advertising was to create a system that simplifies the process for activating media buys. Efficiently matching the supply (publishers) with demand (advertisers) served to enhance the digital spend. While a new lexicon has emerged and tactical functions change, embracing automation does not inherently result in commoditization of publisher assets. Nor does it eliminate the need for sales professionals to present the supply-side value proposition.
Today, five years into the evolution of programmatic advertising, we’ve yet to establish common language for buyers and sellers. Perhaps it is best summed up as the automation of media buying and selling through software, data matching and algorithms.
Within programmatic, two key branches have evolved. The first, Real Time Bidding (RTB), usually refers to auctions that place bids and sell inventory in an automated, real-time setting. The second, Programmatic Direct, utilizes automation to deliver guaranteed buys rather than auction bids. Programmatic Direct is typically used for premium ad placements which are more favorable for niche, B2B publishers concerned with upholding inventory integrity.
Open exchange RTB can be executed independent of specific website brands by buyers with basic controls of the types of content sources within the available supply-side ecosystem. These open exchange placements compete on price and reward publishers with large scale.
In contrast, a private marketplace (PMP) can restrict the bids on inventory from pre-approved buyers. With PMPs, publishers do not have to guarantee a specified number of impressions, and advertisers -- or buyers – do not commit to a spend budget. This walled-garden approach provides controls for both buyers and sellers.
The Obvious Solution for B2B
A recent study from Kantar Media, in conjunction with Connectiv, found that over a third of all B2B planners execute programmatic buys always or often. Further, that figure is growing at a double-digit rate. However, a major gap exists between the volume of credible data and inventory from quality B2B publishers. This void will increasingly impact publishers’ digital advertising revenue as advertisers seek to trade with publishers offering programmatic solutions.
The study also revealed that 60% of B2B buyers using a programmatic platform did so in a PMP. At a time when fraud is rampant, private marketplaces enable publishers to offer advertisers a heightened level of security by keeping premium inventory within a premium ecosphere. This can lead to premium pricing for publishers and demonstrable ROI for buyers.
B2B Publishers Have Been Reluctant to Jump In
Programmatic advertising evolved from a solution to automate the buying process to a pursuit of the most inexpensive rate. As a result, niche publishers without large volumes of inventory were unable to realize meaningful revenue. While the market has evolved to recognize the value of premium media brands, the perceptions stemmed from the past realities have discouraged many within the B2B publishing community from participating. Unfortunately, much of the premium B2B inventory is still not available via programmatic.
Advertisers also experienced the unintended consequences of unproductive, and often destructive, “spray and pray” approach to open exchange RTB. Fortunately, many independent agencies and specialized vertical buyers are bucking that trend. This creates new opportunity for niche publishers with high-value audience data, quality inventory and premium rates.
Advertising has moved to a data-driven environment and new technology innovation is constantly being introduced. The evolution for B2B publishers will be to capitalize on the efficiency of programmatic trading coupled with the security and control of participating in a PMP.